The Nasdaq, which consists of more than 3,000 companies (over 50% are technology-related), is the United States' second-largest stock exchange by market capitalization, just behind the New York Stock Exchange. The Nasdaq is often used interchangeably with the Nasdaq Composite index (^IXIC -0.07%), which is the market-cap-weighted index of stocks listed on the Nasdaq exchange. No preferred stocks or exchange-traded funds (ETFs) are allowed on the Nasdaq, just particular common stocks.
In mid-November 2021, the Nasdaq index was sitting at just over 16,212, but it has since declined to just over 13,511 as of April 14. In 2022 alone, the index has declined by more than 13.6%. Although the index has taken a hit since its 2021 highs, there are two stocks trading on the exchange that investors should keep their eye on.
1. CrowdStrike Holdings
Cybersecurity has become a necessity for any company dealing with sensitive data and technology. In 2021 alone, ransomware attacks were up 105% from 2020 and 232% since 2019. That increases the importance of a company like CrowdStrike Holdings (CRWD -0.28%), which deals with preventing such attacks. Share prices of the cybersecurity company have fallen by more than 20% since hitting November 2021 highs, but those same shares are up about 15.9% year to date, trending against the direction of the broader Nasdaq.
For the fiscal year 2022 (ended Jan. 31), CrowdStrike generated $1.45 billion in revenue ($431 million of that in the fourth quarter), up 66% from fiscal 2021. Of that, subscriptions made up the bulk at $1.36 billion and it added 1,638 new subscriptions in the fourth quarter alone. The company has 16,235 subscriptions as of March 2022, and it's showing no signs of slowing down.
What puts CrowdStrike in a good position long-term is its cloud-first security focus. As remote work becomes the norm for many businesses, on-site network security doesn't play as big a role as previously, and cloud security has become more of a necessity.
As the likes of Microsoft and Alphabet (GOOGL -0.20%) (GOOG -0.12%) acquire cloud security companies to compete in the space (CloudKnox and Mandiant, respectively), CrowdStrike has an early-mover advantage and is in good shape with 65 customers in the Fortune 100, 254 customers in the Fortune 500, and 15 of the top 20 banks.
Alphabet is the third-largest U.S. company by market cap and it's not showing any signs of slowing down. Although the stock price is down over 11.7% year to date, the price is still up over 14% in the past year and just under 200% in the past five years. In 2021, the tech giant brought in $257 billion in revenue (up 41% over 2020), with $75.3 billion coming in the fourth quarter alone (up 32% year over year).
Alphabet has managed to put up these impressive financial numbers (largely from its search engine and YouTube ads) while simultaneously losing billions quarterly in newer segments such as Google Cloud and what the company deems as "other bets." In the fourth quarter alone, those two segments lost $2.34 billion. If the company can manage to make those profitable, they present an even bigger opportunity to grow the business's bottom line.
Alphabet's impressive portfolio of companies -- including Google, YouTube, Waze, Fitbit, and many other top names -- can be credited for its success up to this point, but what could continue driving the company's future growth is its dedication to innovation in different segments (especially Google Cloud) and not shying away from acquiring companies that can help it accomplish that. In 2021 alone, the company announced more deals than any other year in the past decade.